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Coca Cola is the frontrunner to acquire the consumer portfolio of Kraft Heinz because the later threw a tax problem that none of other potential buyers wanted to handle. Photo: AP
Coca Cola is the frontrunner to acquire the consumer portfolio of Kraft Heinz because the later threw a tax problem that none of other potential buyers wanted to handle. Photo: AP

Covid-19: Lockdown in India impacts Coca-Cola global volumes

  • The pandemic has dented sales for the beverage maker across markets due to lockdown measures
  • Coca-Cola has experienced a volume decline globally of approximately 25%, the company said in its earnings release

New Delhi: Beverage maker Coca-Cola on Tuesday said that a lockdown in India drove a steep unit case volume decline in the beverage maker’s bottling investment group—that are the company’s owned bottling operations across markets.

As a result, in its bottling investment ecosystem "unit case volume declined 5% driven by India, due to the impact from the coronavirus," the company said in its earning for the three months ended March 27. To be sure, India announced a strict lockdown on March 24th to contain the spread of covid-19.

The pandemic has dented sales for the beverage maker across markets due to lockdown measures, and reduced business from restaurants, movie halls etc. "Since the beginning of April, the company has experienced a volume decline globally of approximately 25%," the company said in its earnings release on Tuesday.

In India, the company said that consumers made fewer trips to retail stores that “negatively impacted" consumption of its brands.

“In some markets like India the severity of distancing measures has negatively impacted at home (consumption) as well—simply due to the significant reduction in shopping trips. At this stage it is a little too early to determine at what level at-home trends will stay like that," James Quincey, chairman and chief executive officer, The Coca Cola Company, said in the company's earnings call.

In India, company-owned bottling operations are run by Hindustan Coca Cola Beverages that owns 15 bottling plants; over 35 are owned by local bottling partners here. The company does not give stand-alone sales figures for the Indian market.

However, it said that in the Asia Pacific region, unit case volume declined 7%, as strong growth in January was more than offset by a decline in China in February and across all key markets in March, due to the impact from the coronavirus.

The company defines unit case volume as the number of unit cases (or unit case equivalents) of company beverages directly or indirectly sold by the company and its bottling partners to customers.

For three months ended March 27, 2020, the company said its net revenues globally declined 1% to $8.6 billion.

To be sure beverage consumption happens across several channels.

People consume them out-of-home or on-the-go; they are also sold at restaurants, cinema halls etc, while in many markets consumption happens inside homes.

As the covid-pandemic has struck, the beverage maker said most channels were impacted; while e-commerce sales have continued to be resilient.

“In March, as the coronavirus pandemic spread globally, countries meaningfully increased social distancing and shelter-in-place mandates. In markets around the world, the company subsequently saw significant changes in consumer purchase patterns, notably substantial declines in away-from-home channels. In at-home channels, the company witnessed early pantry loading in certain markets, followed by more normalized demand levels, along with a sharp increase in e-commerce. Given that away-from-home channels represent approximately half of the company’s revenues, the company expects the net effect of these consumer purchase patterns to have a significant impact on second quarter results," the company said in its earnings announcement for its first quarter of 2020.

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